Anjos, FernandoPinto, David Alves2024-10-232024-10-232024-01-222023-12-15http://hdl.handle.net/10362/173929Recent research on corporate diversification suggests the existence of superior performance of conglomerates over specialized firms during recessions. The existence of internal capital markets facilitates the re-distribution of cash flows within conglomerates. Nevertheless, the allocation of funds to a specific segment is contingent on the conglomerate’s internal competition for funds. I find noticeable evidence that less competitive conglomerates enhance their responsiveness to investment opportunities to a greater extent during recessionary periods, comparatively to highly competitive conglomerates and specialized firms. Moreover, I find evidence that fiercer intra-conglomerate competition is correlated with greater dependence of investment on internally generated cash flows.engInternal capital marketsBusiness cycleConglomerateCapital allocationmaster thesis203604865